Teva bids $7.46 billion for Barr, whose shares leapt to two-year high on rumors

Global generics number one Teva Pharmaceutical Industries announced mid-morning on July 18 that it has entered into a definitive agreement to acquire USA-based Barr Pharmaceuticals, the world's fourth largest copy-drug firm, in a deal valuing the latter at some $7.46 billion, or $66.50 a share of which $39.90 will be in cash and 0.6272 in Teva American Depositary Receipts.

The news followed rumors of such a transaction, which started on July16 and pushed Barr's shares to a two-year high of $57.01 by close on July17 (Marketletter July 21). Teva's bid is a premium of 42% on Barr's closing price ahead of the rumors and 32% on its average for the 52-week period to June 16, according to the Israel-headquartered company.

The transaction is the latest in a round of consolidation in the generic drugs sector, and benefits Teva which failed to acquire the copy-cat business of Germany's Merck KGaA that went to another US firm, Mylan (Marketletters passim). Generics now account for about two-thirds of the US prescription medicines market by volume.